Nordic Capital, a mid-market buyout group that built its reputation in Scandinavian deals, is setting its sights on becoming a greater European force as it expands south and doubles the size of its latest buyout fund.

From its first €55m ($86m) fund almost 20 years ago, the group has grown and has several acquisitions worth more than €1bn under its belt.

Christian Dyvig and Robert Furuhjelm were hired as partners by the firm in 2003.

The firm, which focuses on deals in Scandinavia, has established itself as one of the leading private equity firms in the region and regularly competes against bigger European and US firms for assets.

Nordic Capital is raising its seventh fund, almost double the size of its previous €1.9bn fund in 2006. According to an investor with knowledge of the firm’s fundraising, Nordic has held a rolling close of its fund at €3.7bn but is targeting €4.53bn.

Nordic declined to be interviewed due its involvement with a public company takeover.

The group made an unsolicited bid at the end of March of €15 per share for Norway’s TietoEnator, a computer services company, which is set to be one of the country’s largest buyouts in more than a year and marks one of the largest buyouts the firm has made on its own. Nordic’s bid values TietoEnator at about €1.1bn.

The TietoEnator offer is awaiting acceptance from shareholders. Its chairman said the board’s preliminary view was that Nordic’s offer does not reflect the true value of the company.

In partnership with UK-based buyout group Apax Partners, Nordic acquired Swedish healthcare company Capio for $3.3bn (€2bn) in October 2006. The deal was the fourth largest for the Nordic region, according to figures from data provider Thomson Financial.

Nordic’s portfolio of healthcare companies is what sets it apart from rivals in the region such as Industri Kapital and EQT, according to an investor. Other firms have focused on sectors such as consumer and retail, which are more susceptible in times of economic downturn.

One of Nordic’s largest and longest-standing investments is Zurich-based pharmaceutical company Nycomed, which it acquired in 1999. After three years of ownership, Nordic sold the company to US firm the Blackstone Group and DLJ Merchant Banking Partners, the private equity investment arm of Credit Suisse, for €1.3bn. Two years later, Nordic bought back a 51% stake which valued Nycomed at €1.8bn. Nordic and DLJ are looking to sell the cancer research division of Nycomed for an undisclosed amount.

Nordic is looking to start operating further south, which is considered by investors as a natural expansion given the size of its latest fund, with one saying it expected Nordic to open an office in Germany towards the end of this year. Although there are “definite plans”, the timing of an office opening is not set.

Washington State has been an investor in Nordic’s previous four funds, committing about $415m since 1998. While the commitment to Nordic’s latest fund offering is not as large as in previous years, including $180m to Nordic’s sixth fund, the pension fund reported it has received internal rates of more than 10 times greater than the European average for top-quartile private equity funds.

The European Private Equity and Venture Capital Association’s preliminary benchmark report for last year showed that for the top quarter of European private equity firms the average internal rate of return was 23.5% for funds launched between 1980 and 2007.

Nordic Capital achieved IRRs of about 32% for its third, fourth and fifth fund. Its third fund, which is fully invested, produced a 3.6 times multiple, according to Washington State.

An investor in Nordic who has reviewed the firm’s investments since its launch, said: “Nordic is flexible and successful. Our information shows on realised deals it has not lost any money.”

The source said it was rare to hear a bad word about the firm, which in part was attributed to the firm’s team ethic. “They work on a team-based approach and decisions are a consensus,” he said.

The firm has 15 partners and 19 investment specialists with offices in Copenhagen, Stockholm and Helsinki. The investment team is regarded by investors as “cohesive”, with one saying they were a “polite” group to work with. The firm might have to address succession issues, particularly as the group expands beyond the Nordic region. Of the 15 partners, seven joined before 2000. At director level, about half have joined in the past two years.

In March the firm appointed Tom Vidar Rygh, former chairman of Orkla, one of Norway’s largest industrial conglomerates, as partner to head an advisory team in Norway. Rygh was responsible for Orkla Securities when it was acquired by Swedish investment bank Enskilda Securities in 2000. Enskilda’s parent bank is SEB.

There have been a number or refinancings of private equity-backed portfolio companies in Scandinavia since the start of the year, which has seen Nordic investment banks take a front seat in debt packages as some of Europe’s largest investment banks are hamstrung since the downturn and are reluctant to underwrite big buyouts.

Nordic is likely to benefit from this as it has strong relationships with local banks, according to an investor in Nordic’s fund.